This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Pharma Deals Booming in 2009

If the pace of recent drugmaker mergers seems a migraine-inducing blur, that's because it is. Pharma deals in the first quarter of 2009 were worth nearly 50% more than all the industry deals announced in 2008, according to a new report.

The study comes on the heels of today's announcement by GlaxoSmithKline (GSK - Get Report) that it will acquire privately held U.S. skincare products maker Stiefel Laboratories for $2.9 million.

The report, from The Mergermarket Group of New York and London, says deals in the quarter carried a combined value of $166 billion -- more than 10 times that of deals announced in last year's first quarter and well over the $114 billion in deals announced in all of 2008. Roche bought the 44% of Genentech (DNA) it didn't already own for $47 billion. Pfizer (PFE - Get Report) is buying Wyeth for $64 billion and Merck (MRK) is buying Schering-Plough (SGP) for $43 billion.

The deals seem evidence that despite the downturn big pharma still boasts the big cash flow to make major moves. In the case of Merck, the reason for the Schering-Plough merger was clear: There is simply no projected earnings growth for Merck by analysts over the next few years thanks to patent expirations and a dearth of pipeline drugs, Brian Gilmartin said in a recent note to investors on RealMoney.com.

But more megdeals are not on the horizon, according to the report. Instead, expect to see more "mid-market transactions" and deals valued below $5 billion.

Glaxo and some other major drugmakers, including Sanofi-Aventis (SNY) and Bristol-Myers Squibb (BMY - Get Report), have recently been telling investors and analysts that they prefer to make smaller, targeted acquisitions that fit with their particular growth strategies.

The report also predicts that mergers and acquisitions will grow in the next few quarters in the stem-cell arena, following President Obama's executive order allowing use of federal funding for embryonic stem-cell research.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BMY $65.63 1.80%
GSK $43.41 -0.41%
PFE $36.08 0.99%
AAPL $121.51 -0.70%
FB $94.14 -1.10%

Markets

Chart of I:DJI
DOW 17,686.69 -59.29 -0.33%
S&P 500 2,104.43 -4.20 -0.20%
NASDAQ 5,129.2280 +0.4430 0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs